The national Economy, Trade, Industry, and Planning Committee at the Lebanese parliament organized two official meetings on January 20 and 22 to listen to a proposal of setting up a currency board in Lebanon. The committee heard from Dr. Patrick Mardini, CEO of LIMS at the first meeting, and Professor Steve Hanke, the number one expert on currency boards worldwide at the second meeting.
Dr. Mardini showed that Lebanon currently has enough reserves to establish a currency board at a very reasonable exchange rate. He then presented examples from Argentina, Bosnia, Bulgaria, Estonia, and Lithuania, showing how currency boards crushed hyperinflation, stopped currency devaluation, increased foreign exchange reserves, stimulated growth, and reestablished fiscal balance. In the second meeting Professor Hanke recommended that Lebanon follow Singapore’s example of economic transformation. He stressed on the importance of monetary stability and showed how it can restore the public’s trust and open the door for additional reforms. He further explained that establishing a currency board in Lebanon does not require any pre-condition and demonstrated how it can solve the problems of external imbalance and fiscal deficit.
Some MPs had concerns about the balance of payment deficit, leading to the loss of foreign exchange reserves. They believed that the country must be able to produce more in order to reduce trade deficit and external imbalances as a pre-condition to any other reform. Other MPs were concerned with the governance of a currency board, the financing of fiscal deficit, and the impact on growth. Several MPs endorsed establishing a currency board in Lebanon and recommended appointing Prof. Hanke as advisor to the parliament to profit from his experience in the field, especially that professor Hanke is willing to offer his services pro-bono.
The two meetings received good media coverage, with the first reported by 13 media outlets and the second by 15.
1st Meeting Media Exposure:
MTV, VDL News, Leb Economy Files, NNA, Elnashra, Almarkazia, Alkhabar Agency, Al Binaa, Tayyar.org, Klyoum, Lebanon Files, Addiyar, Nabd.
2nd Meeting Media Exposure:
Lebanon 24, Almodon, Private Magazine, Headlines Mania, Nabd, Annahar, Union of Arab Banks, NNA, Aljoumhouria, Eliktisad, Tayyar.org, Elnashra, VDL News, LBC, Lebanon Debate.